Catch the illegal argument exception in Net Framework!

src/Build.UnitTests/Evaluation/ImportFromMSBuildExtensionsPath_Tests.cs

@@ -10,6 +10,7 @@
 using Microsoft.Build.Execution;
 using Microsoft.Build.Shared;
 using Xunit;
+using Xunit.NetCore.Extensions;
 
 #nullable disable
 
@@ -842,6 +843,47 @@ public void FallbackImportWithFileNotFoundWhenPropertyNotDefined()
                 FileUtilities.DeleteDirectoryNoThrow(extnDir1, true);
             }
         }
+        /// <summary>
+        /// Fall-back search path on a property that is not valid. https://github.com/dotnet/msbuild/issues/8762
+        /// </summary>
+        /// <param name="projectValue">imported project value expression</param>
+        [WindowsFullFrameworkOnlyTheory]
+        [InlineData("")]
+        [InlineData("|")]
+        public void FallbackImportWithInvalidProjectValue(string projectValue)
+        {
+            string mainTargetsFileContent = $"""
+                <Project>
+                    <PropertyGroup>
+                    <VSToolsPath>{projectValue}</VSToolsPath>
+                </PropertyGroup>
+                <Import Project="$(VSToolsPath)"/>
+                </Project>
+                """;
+
+            string extnDir1 = null;
+            string mainProjectPath = null;
+
+            try
+            {
+                // The path to "extensions1" fallback should exist, but the file doesn't need to
+                extnDir1 = GetNewExtensionsPathAndCreateFile("extensions1", Path.Combine("file.props"), string.Empty);
+
+                mainProjectPath = ObjectModelHelpers.CreateFileInTempProjectDirectory("main.proj", mainTargetsFileContent);
+                var projectCollection = GetProjectCollection(new Dictionary<string, string> { ["FallbackExpandDir1"] = extnDir1 });
+                projectCollection.ResetToolsetsForTests(WriteConfigFileAndGetReader("VSToolsPath", @"$(FallbackExpandDir1)\Microsoft\VisualStudio\v99"));
+                var logger = new MockLogger();
+                projectCollection.RegisterLogger(logger);
+
+                Assert.Throws<InvalidProjectFileException>(() => projectCollection.LoadProject(mainProjectPath));
+                logger.AssertLogContains("MSB4020");
+            }
+            finally
+            {
+                FileUtilities.DeleteNoThrow(mainProjectPath);
+                FileUtilities.DeleteDirectoryNoThrow(extnDir1, true);
+            }
+        }
 
         private void CreateAndBuildProjectForImportFromExtensionsPath(string extnPathPropertyName, Action<Project, MockLogger> action)
         {

src/Build/Evaluation/Evaluator.cs

@@ -2547,7 +2547,16 @@ private void ThrowForImportedProjectWithSearchPathsNotFound(ProjectImportPathMat
                         importElement.Project.Replace(searchPathMatch.MsBuildPropertyFormat, extensionsPathPropValue),
                         ExpanderOptions.ExpandProperties, importElement.ProjectLocation);
 
-                relativeProjectPath = FileUtilities.MakeRelative(extensionsPathPropValue, importExpandedWithDefaultPath);
+                try
+                {
+                    relativeProjectPath = FileUtilities.MakeRelative(extensionsPathPropValue, importExpandedWithDefaultPath);
+                }
+                catch (ArgumentException)
+                {
+                    // https://github.com/dotnet/msbuild/issues/8762 In NET Framework, Path.* function will throw exceptions if the path contains invalid characters.
+                    ProjectErrorUtilities.ThrowInvalidProject(importElement.Location, "InvalidAttributeValue", importExpandedWithDefaultPath, XMakeAttributes.project, XMakeElements.import);
+                    return;
+                }
             }
             else
             {